Have you heard the term ‘bankruptcy’ but are not sure what it means or are you thinking about bankruptcy because of your current financial situation? As Bad Credit Car Finance specialists we have provided some information on bankruptcy and answer some common questions surrounding the subject.
When you go bankrupt almost all of your debts are written off. Deciding to go bankrupt is a big step that involves fees and can impact different areas of your life, such as your job or home and things you may not even think about when weighing up your options.
The most important thing is that you seek professional advice regarding bankruptcy. We would recommend that you seek advice from a debt charity such as Step Change or your local Citizens Advice Bureau. Going bankrupt is a big step to take and you shouldn’t look to do this before you have taken expert advice.
What does bankruptcy mean?
Bankruptcy is a form of insolvency. If you are made bankrupt the possessions, you own may be sold and the proceeds used towards paying your debts. Most types of debt are written off.
What is Voluntary Bankruptcy?
Voluntary bankruptcy is a bankruptcy proceeding initiated by the person who has borrowed funds and who knows that they will not be able to satisfy the debt requirements of creditors. Voluntary bankruptcy is typically commenced when the borrower finds no other solution to the financial situation.
Creditor Bankruptcy Explained
Can creditors make you bankrupt? Yes, they can if the borrower is unable to pay the debts owed. If a creditor applies for bankruptcy the effects are the same compared with if the borrower files for bankruptcy.
What if the debts are in joint names?
If your partner is made bankrupt they will no longer be liable for any debts that you have jointly, but because you have not been made bankrupt you will still be liable for the debts. Which means creditors could chase you for full the full amount owed to them.
There are fees associated with going bankrupt and you need to make sure you can afford the fees you will incur. It would be beneficial to seek advice regarding the cost before starting proceedings.
How will bankruptcy affect your life?
There are clear and obvious elements of your life that bankruptcy will affect such as your access to credit. Bankruptcy will have a serious impact on your credit profile. Which means getting a credit card, mortgage, car finance will be very difficult for some time.
It may not be an obvious one but bankruptcy can put restrictions on your current job or future jobs especially if you work within the financial services industry. Usually you do not need to disclose a bankruptcy to your employer but check the terms of your employment just in case.
If you own your home, it may be sold and the proceeds will usually go to your creditors to pay off debts.
If you rent your home you are unlikely to lose it unless your tenancy agreement specifically says you can’t rent the home if your bankrupt so this is something you would want to check within your tenancy agreement. You may also be affected if you are looking to rent a home as some letting agents are required to conduct credit checks.
Unsure what to do and where to turn? Do you need advice on bankruptcy? We would recommend that you seek advice from a debt charity such as Step Change or your local Citizens Advice Bureau.
Going bankrupt is a big step to take and you shouldn’t look to do this before you have taken expert advice.